OMB: Contingency operations subject to sequestration

The Office of Management and Budget has reiterated to lawmakers that the automatic, across-the-board budget cuts known as sequestration will apply to wartime funding.

In a June 15 letter to Rep. Buck McKeon, the chairman of the House Armed Services Committee, Office of Management and Budget Acting Director Jeff Zients wrote that the Budget Control Act allowed no “flexibility” to exempt Overseas Contingency Operations (OCO), from sequestration.

The BCA, which ended the debt ceiling standoff last August, called for a $1 trillion budgetary cap over 10 years on annual appropriations bills and for the creation of a special congressional committee to come up with $1.2 trillion in further deficit reduction efforts. When the committee failed to come to agreement, the fall-back measure, sequestration, was set in motion.

OMB revealed that OCO funding would be subject to sequestration in a May 25 letter to House Budget Committee Chairman Paul Ryan. The BCA law directed automatic cuts from both security and nonsecurity spending, Zients wrote, which encompasses funding for contingency operations.

In November, Defense Secretary Leon Panetta told lawmakers war funding would not be subject to sequestration.

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OMB: Not a policy choice

Faced with the differing opinions over OCO funding, McKeon, along with Rep. Mike Rogers (R-Mich.), the chairman of the House Intelligence Committee, and Rep. Ileana Ros-Lehtinen (R-Fla.), the chairman of the House Foreign Affairs Committee, wrote to President Barack Obama seeking clarification.

The BCA did not “explicitly address” OCO funding, which has traditionally been used as an “off-budget, supplemental appropriation,” McKeon wrote in the June 9 letter. “We seek to understand what changed to shift the interpretation of the applicability of sequestration to OCO,” the letter stated.

In his response, Zients acknowledged that DoD initially concluded wartime funding was exempt from sequestration. “But, after extensive analysis and consultation between OMB and DoD, we have identified no statutory basis for generally exempting OCO funds from sequestration.”

That determination is not a policy choice, Zients, but one mandated by law. “In other words, this is not a case of ambiguous statutory language that would have granted the executive branch the discretion either to exempt OCO funding or not,” he said.

Adding to the confusion is the fact that while OCO funding is subject to sequestration, annual appropriations for contingency operations are exempt from yearly budgetary caps covering most other spending.

The Center on Budget and Policy Priorities has surmised that Congress is likely to increase appropriations for OCO by a sufficient amount to “offset the pending sequestration,” a tactic it cannot use for other funding areas that are bound by budget caps.